Hacker News Reader

Comment by thinkcomp | Hacker News Reader

Ohad knows his stuff, but he didn't cover everything here. There are other reasons payments are hard for everyone. You can't really have this discussion without talking about point of sale systems. The existing retail point of sale infrastructure in the United States is unbelievably fragmented and old. Apple and Google are in a good position to make devices that replace registers, but adoption is still just as much an issue for them as for everyone else.

This is good for payment startups (such as mine), but you have to have a lot of tenacity to untangle such a giant knot.

View on HN

What do you think of Square?

I think it's the most gorgeous eight-track player ever made. They have enough money to shift, so for their sake, I hope they shift soon. For my sake I hope they don't.

I'll bite ... what is it about their reader / product line that makes it equivalent to a "gorgeous eight-track"?

I've thought the reader looked a bit fragile (and wouldn't hold up to heavy use), but that doesn't make it obsolete right out of the gate.

The next generation of payment technology will not be plastic card-based or involve a magnetic strip. They've created a really nice magnetic strip reader for plastic cards. It's kind of making the most amazing tape deck ever right before the mass distribution of Audio CD. Certainly it's an impressive feat of engineering and design, but it's not what I would pour my time into as an entrepreneur or my money into as an investor.

Personally I think my company's technology does make Square's obsolete right out of the gate. We just face a much different adoption hurdle because we replace the entire system from end to end.

And that's probably why they'll win. This generation of payment technology isn't going away in the next 12-18 months. I bet we won't see the next generation surpass this generation (in usage) for at least five years. During that time, someone like Square can build tremendous momentum and relationships that will allow it to much more easily transition to the next generation, because it has a strong brand, strong relationships with the marketplace, and corporate competency in the space.

For a fantastic example of what I'm talking about in another space, see Netflix.

Maybe. But relationships with whom? Why would a large retailer want to use Square? Why would a competing point of sale vendor with an enormous installed base want to work with Square?

Netflix isn't a very good analogy. The retail payment space involves a three-sided market: consumers, merchants and POS vendors. Netflix didn't even have to struggle with the complexity of a two-sided market. Though it's done well for itself, it also hasn't completed rendered the previous standard useless. Plenty of people use DVD and Blu-Ray today.

I think your view is possible but I'm not sure I understand the details. In contrast, I can answer both of those questions given the model for my company's technology.

I agree, Square has the best possible strategy -- they catch the laggard businesses who still don't have merchant accounts, individual people who have never had merchant accounts (i.e. everyone) and let them get away from PayPal, AND get a platform deployed which can handle NFC or some new payment/loyalty credential for early adopters on the merchant side.

On top of that, Keith Rabois is one of the top operating executives anywhere, and has extensive paypal experience.

NFC has been "the next thing" for years. I worked for an NFC reader company in ... 2003, which had been around for years. (ViVoTech). We don't even use chip and pin cards in the USA -- the magstripe is going to remain a major part of the market for the rest of the decade.

Reply on news.ycombinator.com